10 Ways to Invest in Gold

With the market's sharp swings and continued financial uncertainty, many investment experts and contributors to MoneyShow.com have turned to gold to add balance and diversification to their portfolios. Here are 10 ways to invest in the yellow metal. Adrian Day, Global Analyst The gold stocks are undervalued now. The producers are very cheap. Right now, they have the benefit of higher gold prices, and lower oil prices as well as generally lower commodity currency prices making costs lower even as gold moves up. Most of them have better balance sheets now than did few years ago. The exploration stocks are also very cheap, but they need to be cashed up. It is difficult to raise money at a reasonable level now. In addition, the producers will tend to recover before the exploration companies do. The panic can last a while particularly if we see further developments with the coronavirus. But given that the gold stocks can more rapidly when they turn, I see this as a time to get into the market and pick up some great buys, but to do so cautiously and methodically. I certainly would not be selling aiming -- hoping? -- to buy back cheaper. You do not want to wait until it is clear the market has turned before buying. So, this is a good time to be picking up the very best companies and at the best prices as they become available. In short, this is not a time to panic, not a time -- never is -- to be reactive. It is too late for broad, aggressive selling, even though rallies can be sold. If it is too soon for broad aggressive buying, the best gold stocks and a few other oversold stocks can be bought. Top buys now include Fortuna Silver and Franco-Nevada . We also consider Osisko Gold to be a great buy as well. Bernie Schaeffer, Schaeffer's Investment Research I initiated a long position in SPDR Gold Shares in our Master Portfolio by purchasing 600 shares. Shares of the gold ETF have been strong, adding about 6% year-to-date amid broad-market weakness. GLD recently broke out to fresh seven-year highs and has since pulled back, offering a nice entry on a long position. Prior to the recent market swoon, sentiment toward gold was very bullish. However, the large selloff in virtually all risk assets forced investors to capitulate. This can be seen in the Commitment of Traders Report for gold futures, where total positions on gold are at levels not seen in nearly a year. This recent unwinding of bullish bets creates the potential that these investors will re-enter their longs, which could act as a tailwind for gold moving forward. From a macro perspective, gold has many things currently working in its favor. The Federal Reserve has launched multiple stimulus programs as a result of Covid-19, and this could have a negative effect on the dollar, and conversely be bullish for gold. Additionally, should these periods of low interest rates persist, the potential exists for future inflation. Gold historically has performed well during periods of high inflation. I also initiated a long position in NovaGold Resources, Inc. by purchasing 10,000 shares. Price action on NG has been very strong, with the equity more than doubling over the course of the past year. The shares recently pulled back to their 200-day moving average and bounced sharply off of it, signaling potential support moving forward. NG is currently sitting just below fresh 10-year highs made earlier this year. Continued strength could be expected. Despite its strong price action amid a solid fundamental backdrop for miners, sentiment remains skeptical. Currently, only one analyst covers NG. This creates the potential for future initiations, which could spur interest for new buying. Lastly, short interest has been plummeting, yet the current short interest ratio still sits at over 5. Should NG continue its ascent, this pent-up buying could act as a catalyst to drive it even higher. Omar Ayales, Gold Charts R Us Gold is poised to outperform most asset classes moving forward. Lower rates and economic uncertainty due to perceived excessive stimulus will continue fueling gold's underlying strength. Price action is suggesting Agnico-Eagle Mines could start a renewed rise to the recent highs. The stock must rise above the January downtrend near $47 to confirm support at the $40 level and rise to the recent highs near $62.50. If you're looking to buy or increase exposure, buy at market, below $40. The price pattern at Kirkland Lake Gold is very similar. It's also holding last April-May lows near $29. Our indicators are suggesting momentum could be shifting to the upside. KL is in a great position moving forward, and it's a steal below $30. NovaGold is one of my favorites. It's a rising star given its stellar management team and prime assets. The stock has held up stronger than most, and well above last May's lows. This is a great company that is poised to rise with strength during gold's secular bull market. Mike Cintolo, Cabot Top Ten Trader With Covid-19, plunging oil prices, credit/health worries and central bank printing, it's a time of maximum uncertainty -- and such uncertainty plays right into the hands of gold, which has popped back toward multi-year highs. Barrick Gold , the world's second-largest gold mining company, is well positioned to benefit from this strength. The metal's improving fortunes even before the virus allowed the company to deliver a huge earnings surprise in the fourth quarter, and revenue, net income and free cash flow have seen impressive upward trends since bottoming in 2018. Higher gold prices have also made growth through M&A attractive for miners once again, with Barrick gobbling up Randgold Resources earlier this year; it further combined its Nevada mining assets with Newmont to create a joint venture company (Nevada Gold Mines) that's the world's largest production complex. Barrick forecasts its all-in sustaining costs, a key metric for miners, at $945 per ounce this year, miles below current prices, giving the firm plenty of room to take on additional projects. (Analysts see sales and earnings up 12% and 33%, respectively, in 2020.) The company is disposing of non-core assets, rapidly paring its long-term debt (halved in 2019!) and has announced a 10-year plan to become the world's most valued bullion company, focusing on steady production and gushing free cash flow. The wind is certainly at Barrick's back today. Despite the global uncertainties, gold and gold stocks got hit hard during the first wave of the virus-related selling, and GOLD was no exception, nearly getting cut in half at its nadir! However, the buyers quickly stepped in -- shares finished up two weeks ago after that huge shakeout and have now powered back to their 50-day line. If you want to play gold, then GOLD looks like the one of the best options. Newmont and some other precious metal stocks have roared back from the market's nadir two weeks ago and look poised for higher prices. Newmont isn't as much a growth story as a free cash flow behemoth -- the company is the largest gold producer in the world (thanks in part to its acquisition of Goldcorp in early 2019), cranking out north of six million ounces last year mostly via eight top-producing mines (and two more that are ramping up). While production growth is likely to be mild (gold production relatively flat in the years ahead, though some other metals could boost output a bit), the real story here is about Newmont's own recent actions that put it in a position to crank out lots of cash . Thanks to debt reduction and cost cuts (all-in sustaining costs south $900 per ounce this year), the firm believes it will produce more than $2 billion annually of free cash flow if gold stays at $1,500 per ounce, and that figure will rise (or fall) $400 million annually for every $100 increase (decrease) in gold. With that outlook, Newmont is hiking its dividend ($1 per share annually; 2.1% yield) and buying back shares, and there could be more of that on the way if all goes well. Of course, should precious metal prices collapse, all bets are off, but the fundamentals (worldwide money printing, uncertainty) look bullish in the months ahead. As gold stocks go, Newmont and Barrick appear to be the two best positioned. NEM got going in November and gained strength during the initial phases of the virus selloff, but it then got flushed along with everything else, falling more than 35% in just a couple of weeks! But it quickly steadied itself and has since shown tennis ball action, popping back to within a point of its high. Volatility will remain extreme, but we're not opposed to a small buy around here -- with a stop in the $40 area.

10 Ways to Invest in Gold

You do not want to wait until it is clear the market has turned before buying.

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